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What's in the Portfolios of Senior Corporate Executives

What an investor does for a living can influence decisions they make regarding their investments.

This is especially true of Senior Corporate Executives, who are often active investors who prefer having long-term savings vehicles along with their more volatile stock market investments.

An exhaustive research study by Spectrem on the investment habits of Senior Corporate Executives illustrates the extensive investment habits of the successful corporate business people. Senior Corporate Executives: How to Serve the C-Suite examines the investment tendencies of the high-level professionals with an eye toward advising advisors on what is important to these wealthy clients.

“it’s not about preconceived notions; it’s about the kinds of products and services executives tend to prefer,’’ said Spectrem President George H. Walper, Jr. “Insurance policies and trusts are popular choices for executives, and for those clients that are not yet invested in those products, a suggestion in that direction might be a good idea.”

In the case of Senior Corporate Executives, the preference for long-term investments is evident from the research. The Spectrem report compares Corporate Executives to investors in other occupations, and indicates those areas in which there are significant differences.

The two products where Senior Corporate Executives are more involved than investors in other occupations is personal trusts and life insurance.

Almost half of all Senior Corporate Executives (47 percent) have a personal trust. That compares to just 27 percent of investors in other occupations, as the personal trust industry continues to see a decline in total accounts.

Senior Corporate Executives do follow the trend among all trust holders with 92 percent serving as a self-trustee.

Advisors who handle trusts can suggest to their corporate executive clients the benefits of establishing a trust, or turning a trust over to them if the work involved in serving as a self-trustee gets to be too much to handle. This is a particularly good idea with corporate executives because the Spectrem study shows that they tend to be more advisor-dependent than other investors.

Spectrem research shows that Senior Corporate Executives and Managers are the most likely to own life insurance (55 percent). The average mean value of life insurance policies held by executives is high, at $634,000. For both corporate executives and managers, more than 40 percent have their insurance policy through their employer.

Senior Corporate Executives are also slightly more likely to have long-term care insurance (34 percent to 29 percent). This is an indication that corporate executives do have a long-term view of their financial status.

There are also marked differences in regards to investing in equities depending on occupation. Senior Corporate Executives are more invested in individual U.S. stocks (79 percent to 73 percent among other occupations) and much more likely to have investments in international or foreign mutual funds (56 percent to 47 percent). There is also a greater tendency to invest in individual international stocks (29 percent to 19 percent).

This is consistent with data showing Senior Corporate Executives are more knowledgeable and involved in investing strategies. Advisors working with corporate executives should be prepared to consider many different options and have detailed explanations for an expansive list of investment interests.

Top Takeaways for Advisors

This information creates a snapshot of the outlook corporate executives have toward their investments as well as their thoughts about protecting the next generation. With ownership of trusts, life insurance and long-term care insurance, Senior Corporate Executives are thinking about their offspring. Advisors can use that consideration to suggest other ways to promote financial wellness for children and grandchildren.

Are these clients too focused on the long-term future? If a corporate executive seems well prepared financially to protect the financial interests of his or her children, perhaps they can be urged to consider a move into shorter term investment strategies as well.

Senior Corporate Executives like to take advice from their financial advisors, however, they expect their advisors to be well-prepared and to provide in-depth information regarding the investment strategies they may suggest.

*According to Spectrem research, there are currently 29.8 million households with $100,000 - $1 million in net worth (not including primary residence, NIPR). There are 9.1 Millionaire households ($1 million - $5 million net worth, NIPR), 1.21 million Ultra High Net Worth households ($5 million - $25 million net worth, NIPR) and 145,000 households with more than $25 million in net worth, NIPR.

About Us

Spectrem Group strategically analyzes its ongoing primary research with investors to assist financial providers and advisors in understanding the Voice of the Investor.